Xbox Game Pass es rentable, according to Phil Spencer, and accounts for roughly “10 to 15 percent” of Microsoft’s gaming revenue. Nevertheless, growth is slowing and price increases are possible.
In a Wall Street Journal Live segment, picked up by journalist Tom Warren, Spencer shed more light on the subscription service, saying that it is currently profitable. Nevertheless, Game Pass could be reaching a user saturation point.
“We’re seeing incredible growth on PC…on console I’ve seen the growth slow down, mainly because at some point you’ve reached everyone on console who wants to subscribe,” Spencer said.
Phil Spencer confirms at WSJ Live that Xbox Game Pass is profitable for Microsoft. It’s around 15% of gaming revenues for Microsoft
“I think it will stay in that 10-15% of our overall revenue, and it’s profitable for us.”
— Tom Warren (@tomwarren) October 26, 2022
spencer too hinted at possible price increases, either on Xbox Game Pass or on the consoles themselves. While Sony has recently raised PS5 prices in many territories, Xbox has refrained from following suit.
“I think at some point we’re going to have to raise prices on certain things, but going into this Christmas we thought it was important to keep prices down,” Spencer said. “We have maintained the price of our console, we have maintained the price of the games… and our subscription. I don’t think we can always do it. I do think that at some point we will have to raise some prices on certain things…”
Spencer’s remarks were part of a wide-ranging discussion, with topics such as the future of Call of Duty and the Metaverse. It comes on the heels of Microsoft’s recent earnings report, in which Xbox posted strong sales despite supply chain issues. Xbox has refused to reveal figures for subscriptions or revenue for the service, but some media outlets have reported that it could be as high as $3 billion.
All of this comes against the backdrop of Xbox’s current attempt to push its deal with Activision Blizzard through various regulatory bodies around the world, most notably the UK Competition and Markets Authority. If it goes ahead, it is expected to do so sometime in 2023.